FILE - A man places his hand near the logo of a Rolls Royce at the Shuiguan Great Wall on the outskirts of Beijing, China, Sept. 18, 2011. A new law now tries to coordinate charitable giving by country's richest.
FILE - A man places his hand near the logo of a Rolls Royce at the Shuiguan Great Wall on the outskirts of Beijing, China, Sept. 18, 2011. A new law now tries to coordinate charitable giving by country's richest.

China's capitalists have already joined the ranks of the world's wealthiest people, and many have been embracing philanthropy and building private foundations to support charitable causes.

But the government has passed a new Charities Law which allows Beijing to guide the flow of these funds to charities that it supports. The measure makes it compulsory for donors to keep the government informed about their contributions.

That will likely affect the functioning and independence of private foundations owned by major business groups and wealthy individuals. Many of their foundations were created, in the first place, because the wealthy want to control the use of funds instead of relying on more opaque state-backed charities.

A large section of the Chinese wealthy have made their money because of government support, and are closely linked with the Communist Party. But many have embraced the philosophies of Western capitalists who turned to philanthropy after making their fortune.

"I have spoken to many of them. They have read works of Rockefeller, Carnegie, and they feel they are in the same position, Anthony Saich, director of Ash Center for Democratic Governance and Innovation at the Harvard Kennedy School, told VOA. "They made money, often through monopolies and other ways, and now they are thinking of giving back to society. It is a growing trend in China."

Almost half of the 100 most generous people in China have either established their own foundations, or are planning to do so, he said. The Ash Center, which produced a generosity index of top 100 Chinese philanthropists, found that they had channeled 60 percent of the contributions to their home provinces.

Shift in giving patterns

A recent report by the wealth researcher, Hurun Center, shows that 34 percent of the wealthy donors in the Chinese mainland made their contributions through their own foundations.

"In the past, the wealthy gave to the Red Cross or government-approved charities. Now, they are looking for creative ways to make a real social impact. Like encouraging the use of new technology for conservation and environmental protection," Rupert Hoogewerf, Hurun Report chairman, said.

FILE - A beggar asks for money from people sitting
FILE - A beggar asks for money from people sitting at a shopping mall in Shanghai, China, Apr. 19, 2012. Many of China's nouveau riche now are thinking of giving back to society.

"Heads of companies like Alibaba and Tencent are trying to leverage their online platforms to expand philanthropic work." For example, there are 700 million people, mostly shoppers, connected to Alibaba's online platform, he said.

The Shanghai-based Hurun Report found that 51 Chinese donated more than $80 million each in 2015. Four super rich, Li Ka-shing from Hong Kong, Jack Ma of Alibaba, Pony Ma of Tencent and Facebook’s Priscilla Chan from the U.S. contributed $1.5 billion each. Some like Jack Ma contributed shares to their foundations, and others like Pony Ma established fund-raising platforms.

An important question is whether the new Charity Law will scare away a lot of donors who want to avoid questions being asked about the source of their funds, particularly in view of the ongoing anti-corruption campaign. Besides, the government guidance mechanism would take away some of the freedom of the donors in choosing what fields they want to contribute to, analysts said.

"Some of the wealthy perhaps do not want people to understand how much wealth they have made, and perhaps asking them questions where it came from, particularly in the current campaign against corruption — that does moderate [the enthusiasm for giving] somewhat," Saich said.

Red fears

The Communist Party has its own concerns about the behavior of the new rich who have built close linkages with the Western world through business, and by sending their children to schools abroad. It is worried some of them might support causes espoused by the government's critics or labor-related causes.

"The state is afraid of the idea that somehow an independent wealthy could emerge, and that they might fund opposition to it," Saich said adding, "They [Communist officials] are making some false analogies, about what led to the overthrow [of government] in Egypt, what led to color revolutions. They want to make sure that as civic organizations develop, they have pretty good control over what these organizations are doing".

FILE - A man prepares to push a garbage cart near
FILE - A man prepares to push a garbage cart near a shop selling luxury watches along a shopping street in Beijing, China, Aug. 3, 2010. Many of China's richest have embraced the philosophies of western capitalists who turned to philanthropy.

Ash Center's director of China Programs, Edward Cunningham, said in the research report, “One big question is what role will these [wealthy] individuals play in China’s broader political, social and economic debates moving forward?”

Neglected classes

The flow of charity funds have remained skewed in China. China’s poorest areas such as Tibet, Xinjiang, Ningxia, Gansu and Yunnan combined received only 1.96 percent of the funds contributed by the top 100 donors, it said.

Besides, there are grave concerns about how the new law will be implemented and whether it will reach the most desperate groups.

"Those groups in Chinese society who are considered marginal like people who are the government's critics, people living with HIV/AIDS, I don't think they are going to benefit from this new wealth and new philanthropy," Saich said.

Some analysts think the new law would prove to be beneficial in the charities field.

"The section on information disclosure in the Charity Law encourages greater transparency and accountability among charitable organizations. The law strengthens the position of donors, as they can track what their donations are used for," Matthias Stepan, head of Program Domestic Politics at the Mercator Institute for China Studies (MERICS) in Berlin, said.

Speaking about the new Charity Law and Foreign NGO Law, Stepan said, "The two new laws are a game changer for their operations in China. Foreign non-government organizations [NGOs] and major international donors will reconsider the type and scope of their operations in China."  

Foreign NGOs will provide less funding to China particularly to state-backed charities, he said, adding "What I expect is that they will put more weight on activities of capacity building."